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Study grounds high expectations from marijuana taxes

DENVER - Marijuana taxes come from one place, marijuana users. To get a better idea of just how many people that will be under Colorado's new Amendment 64, a team of economists from Colorado State University's Colorado Futures Center put together a detailed study projecting marijuana consumption. Their study estimates some 642,772 people will buy the drug from retailers in 2014 consuming roughly 2,394,428 ounces. The Campaign to Regulate Marijuana Like Alcohol promised voters the first $40 million dollars in taxes collected from the sale of the drug would be used for new school construction through the Building Excellent Schools Today (BEST) Program. Lead Economist Phyllis Resnick says based on their estimates, the state's schools should temper expectations. "If you take $600 per pound of marijuana and you weigh it up against what we think the consumption levels are going to be, then the math just works out that that 15 percent excise tax will generate about half of the $40 million," Resnick explained. Adjusting their calculations to the 10 percent retail sales tax level that lawmakers have proposed to voters this fall brings down the budget for school construction to $14.7 million. Resnick estimates the remaining taxes collected will only be enough to cover the cost of state regulation and oversight of the new industry. In fact, lawmakers cut out public health and safety reporting requirements to lower the state's administrative costs. "If we find that we want to fund initiatives beyond the regulation we think that it could be tight to pay for everything," Resnick said. She expects marijuana taxes to peak early and slowly start to diminish over the years. "We also think there will be an initial sort of wow factor associated with legalization. We may have some marijuana tourism in the early years that won't sustain over the years especially if other states begin to legalize as well." In the report, Resnick points out their estimate will likely be lower than reality due to the lack of reliable data estimating marijuana consumption by tourists and people under the age of 21. Due to the dynamics surrounding marijuana taxation, the Futures Center also created an online Amendment 64 Calculator that lets users change variables to get different outcomes.